Coffee Trends: Fall 2019
By Brian Martell
Vending and the world’s most valuable resource
By Brian Martell
A little over a century ago, The Supreme Court of the US passed judgment under the Sherman Act to break up the most iconic monopoly in American History. Standard Oil, the monolith that controlled nearly 90 per cent of the American oil industry at the time, was broken up into 34 separate companies.
A lot has changed since that 1911 decision, including what many used to refer to as the world’s most valuable resource (arguably oil, but those of us in the coffee business would beg to differ).
What has not changed is the general public’s aversion to monopolies; like the negative perception garnered by J. D. Rockefeller, so too have the new monopolies and oligopolies felt the public’s wrath when boundaries have been overstepped. So, what is the new commodity of 21st century monopolies? Data. Specifically, your data. Google, Facebook, Twitter, and a few others have become the global Standard Oil of our day, mining data that, had its good side, like social media, which help bring people together. However, its bad side is that it can also tear us apart (think of Cambridge Analytica.) The value of the data is similar to any ore that is refined: Its value lies is in what you can extract from it to better understand markets and trends and then capitalize on that knowledge. Data can also be a means of drawing talented individuals together to create synergies and opportunities. In these cases, the resulting economic benefit is secondary or tertiary but can be even more powerful in the long run than just matching consumers to products.
So what does vending have to do with (big) data? Over the course of many decades, the humble vending machine has seen several technological advances; many dealing with the mechanical function of the equipment but perhaps the most far reaching has had to do with data collection. Starting in the 80’s, certain vending machines used the DEX protocol to collect data on what was happening in the machine such as inventory, and coin-box reconciliation. This has expanded to much more sophisticated data collection, but still revolved around data specific to the machine’s environment.
What if the vending equipment was configured to gather data from users who voluntarily shared it in exchange for discounts or other perks? While this may sound farfetched, consider the business model of Shiru Café. Developed in Japan by a young entrepreneur, the concept involves giving away free coffee to students in exchange for some of their data, where sponsors to the Shiru Café experiment (BASF, PWC, Mitsubishi, et al) can use this data in their recruiting efforts. There are currently 24 locations in Japan, the US and India; all strategically located in and around universities and all are well appointed and well-staffed, serving Fair Trade Organic coffees. Data sharing is voluntary but a condition of frequenting the coffee shop and all parties understand the why, the costs and the benefits of this exchange. Using algorithms for primary data triage, these companies seek out talent from the Shiru patrons that would be a good fit with their needs and corporate culture. The sponsors get an inside track on their next generation, and the students not only get potential job offers, but a really swell cup of coffee too!
Current vending machines have become media platforms, sporting touch screen displays, engaging consumers on more levels than ever before and more and more are wirelessly connected to networks. The look and feel is more akin to a tablet than to what a vending machine was just 15 years ago. Taking the next step into creating an input point for data other than consumer preference or machine inventory levels cannot be far away. From the point of view of equipment’s evolution, this is the next step. Riffing off of the Chiru example, vending operators who have modified their infrastructure to accept relevant data from consumers and a back of the house system to process it, could engage with both their end user customers as well as organizations (companies, institutions, researchers, health organizations, etc.) that have an interest in the specific cohort using the machines. The results of such collaboration in data sharing could have a multitude of benefits, some not even yet imagined. Some of the possibilities could be gaining insight into traffic patterns for public policy, the allocation of health resources, or very possibly taste preferences for new products. All this data has a value, one that the seeker would be willing to pay for from the vending operator.
The vending industry is well placed to take advantage of this century’s sine qua non. The technology built into much of the equipment, the widespread reach of locations, carefully selected to yield good returns on traffic patterns, and the networked infrastructure all amount to an opportunity worthy of capitalization.
Comments, questions, feedback, start a dialogue? Please e-mail Brian at Brian@heritage-coffee.com
Brian Martell works at Heritage Coffee as vice-president of sales and has many years of industry experience. Brian has also been the recipient of three prestigious awards: the Don Storey, Stuart Daw, and the Albert DeNovelus Customer Service awards. Questions, comments, feedback, start a dialogue? Email him at email@example.com.